(PV) INDUSTRY - Dipartimento di Economia

THE CHINESE PHOTOVOLTAIC (PV) INDUSTRY:
Drivers of competitiveness
Nicoletta Marigo
Istituto Materiali Elettronica e Magnetismo – CNR Parma
[email protected]
International Industrial Economics: Expert Seminars
Parma 25/11/2015
OUTLINE
●
PV sector overview: demand, supply and price trends
●
Research questions
●
●
●
PV technologies, industry value chain and cost reduction
strategies
Drivers behind China's emergence in the PV global market and
value chain
Main conclusions and implications for the EU solar industry
CUMULATIVE PV INSTALLED CAPACITY: 2005-2014
Photovoltaics is a fast growing market
Installations growth rate (CAGR): 44 % between 2000 to 2014
EU: 75%
China: 5%
183 GWp at
the end 2014
EU: 48%
China: 18%
Source: JRC, PV Status Report 2014 https://setis.ec.europa.eu/sites/default/files/reports/PV-status-report-2014.pdf
(data source: Epi 2014, Eur 2014)
WORLD PV CELL/MODULE PRODUCTION (2005 - 2013)
Since 2000, total PV production has increased by almost two orders of
magnitude, and over the last decade the CAGR has been about 55%
EU: 6%
China: 69%
EU: 29%
China: 6%
Source: https://setis.ec.europa.eu/sites/default/files/reports/PV-status-report-2014.pdf
45 GWp of
total PV
cell & module
shipments at
the end 2014
TOP TEN PV MANUFACTURERS FROM 2001 TO PRESENT
Rank
2001
2006
2009
2014
1
Sharp Solar
Sharp Solar
First Solar
Trina
2
BP Solar
Q-Cells
Suntech
Hanwha
3
Kyocera
Kyocera
Sharp Solar
Yingli
4
Shell Solar
Suntech
Yingli
NeoSolar
5
Astro Power
Sanyo
Q-Cells
Jinko Solar
6
RWE/Schott
Mitsubishi Electric
JA Solar
First Solar
7
Isofoton
Schott Solar
Trina
Motech
8
Photowatt
Motech
SunPower
Hareon
9
Sanyo
BP Solar
Kyocera
Canadian Solar
10
Kaneka
SunPower
Motech
Gintech
% Above
94%
80%
62%
51%
% All
Others
6%
20%
38%
49%
Total
shipments
339.9 MWp
1954.1 MWp
7910.3 MWp
39270.3 MWp
http://www.renewableenergyworld.com/articles/2014/01/top-ten-pv-manufacturers-from-2000-to-present-a-pictorialretrospective.html
PRICE HISTORY OF SILICON PV CELLS (in US$ per Watt)
90
80
$76.00
(~ 71 €)
70
60
$/watt
50
40
30
20
10
$0.30
1977
1981
1985
1990
1995
2000
2005
Source: Bloomberg New Energy Finance & pv.energytrend.com
2010
2015
(~ 0,28 cent/€)
PV MODULE PRICES BY COUNTRY
2.5
- 45%
EU import duties
on Chinese PV
cells & modules
2
1.5
€/Wp
Germany
Japan
China
1
0.5
0
Dec 2009
Dec 2010
Dec 2011
Dec 2012
Dec 2013
Dec 2014
Oct 2015
Source: Solarserver http://www.solarserver.com/service/pvx-spot-market-price-index-solar-pv-modules.html
CONSEQUENCES OF PRICE REDUCTION
●
Margin erosion (particularly severe in 2011-2012)
●
Firms declaring bankruptcy or recurring to lay-offs
●
Industry consolidation (horizontal integration) and restructuring
●
Anti dumping measures against the Chinese producers.
The EU has an average 47.6% import duty on 100-plus Chinese
manufacturers found to have been involved in dumping solar
products in the EU
●
Changes in the market positioning of other PV technological families
RESEARCH QUESTIONS
●
●
●
●
What drives the competitiveness of the Chinese PV cell and
module producers?
What is the role of technology innovation, vertical integration,
scale, labour, policies (and state-directed effort to dominate the
global PV market by “dumping” product at below cost) in
keeping down the price of the Chinese PV modules?
What is China's place in the international PV value chain?
What are the implications and the opportunities still open to
the EU PV industry?
SOLAR PV: HOW IT WORKS
Source: http://convertnews.com/1827-photovoltaic-panel-how-it-work-buy
SOLAR PV SYSTEM COMPONENTS
Solar cell:
cell basic unit of a PV system. It converts the
energy of the sun light directly into electricity
PV modules:
modules consists of many interconnected solar cells.
A number of PV modules connected together (to
increase the electrical power generated) forms an array
Balance of System (BoS):
(BoS) all components of a PV system
other than the PV modules: wiring, switches, mounting
systems, solar inverters, batteries ….
FROM THE PV CELL TO PV SYSTEM
Charge
controller
Battery
12 cm
Solar cell
material
preparation
MPP Tracker
Inverter
Direct current
(DC) load
Alternating current
(AC) load
DIFFERENT TYPES OF SOLAR CELLS
Solar cell material preparation
Wafer-based
Monocrystalline
Silicon
Polycrystalline
Silicon
Sunligh concentrators
Thin film
III-V Semiconductors
Organic
materials
II-VI Semiconductors
(CdTe, CIGS,
GaAs and others)
Amorphous
Silicon
PV TECHNOLOGICAL FAMILIES (MATURITY)
ANNUAL PV PRODUCTION BY TECHNOLOGY
WORLDWIDE (in GWp)
Source: Fraunhofer Institute for Solar Energy Systems, Photovoltaic Report 2014
PV INDUSTRY VALUE CHAIN (include R&D and
downstream)
Producers of materials
and components
Producers of equipments
BoS,
mounting
systems ....
R&D
Polysilicon
(feedstock)
1
Ingots
2
Cells
3
4
Modules
5
System
PV related
services
PV c-Si MANUFACUTING VALUE CHAIN AND ITS
TECHNOLOGICAL CONTENT (2009)
No. of market
participants
Polysilycon
70+
(top 7: 90%
market share)
Factory capital
expenditure1
Technological
know how
Jobs/MW
(2008)
$500m - $1bn
3.5
Ingots/wafers
208
(top 5: 90%
market share)
$60m
3.5
Cells
239
(top 10: 50%
market share)
$40m
5
>988
(highly fragmented)
$23m
6
> 1000 (highly
fragmented)
n.a.
Modules
System
installations
Barriers to entry
High
20
Low
Note: capital expenditure is for a 100MW plant and takes into account depreciation over 7 years.
Sources: Green Rhino Energy, 2012 (for market participants) and U.S. Department of Energy, 2011 (for capital
expanditure). Friedman, 2009 (for jobs per MW)
1
Production
capacity
COST REDUCTION AND COMPETITIVNESS DRIVERS IN PV
●
at the cell/module level:
1. technological innovation;
2. production optimization;
3. economies of scale and vertical integration.
●
At the PV system level:
1. increased performance ratio of PV systems;
2. extended lifetime of PV systems;
3. development of standards and specifications
●
... but also policies
Technological innovation: role in cost reduction
Main bottleneck for c-Si PV cost reduction is the cost of
the material of which solar cells are made: Silicon
Source: EPIA (2012); Kluftinger, Roller and Gallagher (2005).
IMPACT OF CELL EFFICIENCY ON PV SYSTEM COSTS
Solar cell efficiency: quantity of radiated light converted into useable
electric power
An icrease in efficiency of 1% is able
to reduce costs per Wp by 5-7%
Sources: NB Mason, PVSAT-8, Newcastle 2.4 Apr 2012. EU PV Technology Platform, 2011
EFFICIENCY RATE OF INDUSTRIAL PV MODULE OVER TIME
Technology
Cell efficiency
Module efficiency
Thin-film (CdTe)
10 – 11%
Crystalline Silicon
Mono
Poly
16 - 22%
14 - 18%
13 – 19%
11 – 15%
Source (figure): IEA PVPS
Source (table): EPIA 2010; Photon International, March 2010. EPIA analysis. Efficiencies based on standard test conditions
ROLE OF SCALE ECONOMIES ....
Producing more of a product (i.e. increasing production capacity) allows for
economies of scale along the value chain and lowers the cost per unit
In the case of PV: for every doubling of producion capacity direct costs of
manufacturing can drop on average between 17% and 22% (sorce: NREL)
Increased manufacturing scale accounted for about 40% of c-Si cost reduction
between 1975 and 2001 (source: Nemet, 2006)
2004
Production capacity of a
PV module manufactuer
over time
Only
few MW
2014
> 1GW
... AND OF VERTICAL INTEGRATION
Advantages
●
Increases Competitiveness
●
Reduces Overhead costs
●
Allows companies to capture margin at every stage of the value
chain.
Disadvantages
●
●
Less flexible when market requirements change
For c-Si: All different parts in the added value chain have to keep up
with leading edge technologies
ROLE OF POLICIES
Policies have been key in PV development:
- market creation
- industry development
- public acceptance
Types of policies
Examples
Deployment measures (to increase installed
capacity)
Subsidies on quantities (tender or quota
systems) or on prices (feed-in tariffs). Example:
Conto Energia in IT
Measures to support the industry
Direct subsidies, reduced taxes, interest reduced
loans
Support to technology improvement and
innovation
PV R&D support schemes, both for new
options/technologies and to enhance public cofunding of private innovative/R&D activities.
Examples: Horozon 2020 (EU); Programma
Industria 2015 (IT)
CHINA'S PV MODULES PRODUCTION (2001 - 2013)
China 1st PV
module and cell
producer
Source: IEA PVPS, Annual Report 2013
CHINA PV INSTALLED CAPACITY AND TARGETS
Source: IEA PVPS, Annual Report 2013
CHINA'S COST REDUCTION STRATEGY: TECHNOLOGICAL
INNOVATION (2012)
HIGH EFFICINECY PV CELL MADE IN CHINA
Source: IEA, PVPS Annual Report 2013
VERTICAL INTGRATION: LINKS ON THE VALUE CHAIN
WHERE THE PV TOP MANUFACTURERS ARE PRESENT
Firm
Polysilicon
Wafer/Ingots
Cells
Modules
System integration
& project
development
First Solar (US)
n.a
n.a.
x
x
x
Suntech
-
-
x
x
x
Yingli
x
x
x
x
-
Trina
-
x
x
x
-
Canadian Solar
-
x
x
x
x
Sharp (Jap)
-
x
x
x
x
Hanwha Solar One (Kor)
x
x
x
x
x
Jinko Solar
x
x
x
x
-
LDK Solar
x
x
x
x
-
Solar World (D)
x
x
x
x
x
Source: Bayaliyev, Kalloz and Robinson (2011); Xu et al. (2012); company's data
COST ADVANTAGE DUE TO SCALE AND VERTICAL
INTEGRATION
Cost comparison: US vs China's PV cell manufacturing
China 18-20% core cost advantage
Source: http://www.enfsolar.com/directory/equipment/crystalline_ingot_growing
CHINA'S PRESENCE ALONG THE PV VALUE CHAIN
Equipment - Crystalline Ingot Growing Manufacturers
Companies involved in
Crystalline Ingot Growing
machine production, a key
piece of equipment for the
production of solar ingot. 45
Crystalline Ingot Growing
equipment manufacturers
are listed in the ENF Solar
website
The majority are
Chinese
CHINA'S PRESENCE ALONG THE PV VALUE CHAIN
Components - 2013 PV Inverter Supplier Rankings
China and Japan together represented 35 percent of global PV inverter
revenue in 2013, unlike just 12 percent in 2011
SOURCING OF MATERIALS AND EQUIPMENTS
Encapsulants
Glass
Aluminium paste
Almost all the materials useful to produce PV cells and modules
can be sourced in China with an estimated cost advantage over
the U.S.-based cell manufacturers of 18% (source: NREL)
CHINA PV R&D
●
Dozens of research institutes, organizations and companies are engaged in
PV cell R&D, both c-Si and thin-film
Nankai University: R&D on CIGS production process; supported by National 863
Program of MoSt (7.5m €)
●
●
Several National programmes support R&D in key technologies:
wind/PV/storage/transmission demonstrations
12th FYP (2011-2015) R&D targets for PV:
30% reduction in the production cost for Poly-silicon
At least 50% of the materials used should be sourced domestically
Equipment for c-Si cell production (including 'Turn-key') should be made
domestically, with 'self-owned intelligent property'
ROLE OF CHEAP LABOUR: PRODUCTION COST IN AN
INTEGRATED WAFER-MODULE FACILITY
2%
12%
30%
5%
12%
Polysilicon
Other materials
Depreciation
Labour
Utilities, overheads
Yield loss
Labour is just a small
fraction of the overall c-Si
cost
39%
Not all the manufacturing links along the c.Si value chain have the knowledge
intensity and require abundant labour
Overall the cost saving due to labour is estimated to be 0,002 €/W (Source:
Mutti, IT PV Summit 2012)
CHINESE POLICIES TO SUPPORT PV (2011)
NEW 2016 measures to support PV
➔
13th Five-Year Plan (2016-2020): priority to distibuted generation vs utility-scale
➔
Renewed version of Renewable Portfolio Standard
PV industry encouraged to establish and localise production abroad (support granted by
China's Import Export Bank)
➔
'One Belt, One Road': promotion of cross borders low-carbon infrastructure construcions
(US$40b Silk Road Fund + US$50b Asian Infrastructure Investment Bank)
➔
China-Pakistan Economic corridor (wind, hydro & solar PV projects under development)
➔
Sources: Bayaliyev et al. (2011);
Haugwitz (2015) http://www.pv-tech.org/guest-blog/chinas_future_solar_ambitions_at_home_and_abroad
What drives the competitiveness of the Chinese PV producers?
●
Expansion of the productive capacity
●
Benefits from scale and vertical integration
●
Moving forward in terms of technological capabilities and innovation
●
●
●
●
Increasing presence along the whole PV value chain (sourcing
equipments and materials at home allows further costs reduction)
Access to credit and government support towards industrial
competitiveness
Global market dynamics also played a role (e.g. declining prices for
inputs, notably polysilicon; over-capacity in module supply)
Labour cost only marginal
... however: more than 90% of PV cells produced in China are polysilicon
cells
BUSINESS OPPORTUNITES FOR THE EU PV INDUSTRY (1)
●
Niche production in areas of premium technology
New cell concepts:
back contact solar cells developed by ISE (Germany)
New processing methods:
advanced wafer cutting techniques developed by
Synova (Switzerland)
Material improvements:
polysilicon feedstock with higher quality developed
by IISB (Germany)
BUSINESS OPPORTUNITES FOR THE EU PV INDUSTRY (2)
●
Opportunities in other PV technology families
Organic / polymer solar cells: low cost,
sustainable transparent solar cell coating that
can be printed on building glass (by Oxford
Photovoltaics - UK)
Novel printed plastic solar cell technology
based on organic semiconductor materials (by
Eight19 - UK).
High-efficiency CIGS thin film solar modules on
flexible plastic foil (by Flisom - Switzerland)
BUSINESS OPPORTUNITES FOR THE EU PV INDUSTRY (3)
●
Evolution of the pv market and new types of applications
ed
t
c
e
nn
o
C
Gri d rg y
Ene ration 1st level:
e
Ge n
Structural Integration
BIPV
vo
o
t
o
Ph
2nd level:
(1) + multi-functionality
3rd level:
(2) + integration with
electrical appliances
s
c
i
lta
2000
Source: Mazzer, 2012, personal communication
Sel
f-po
equ w ere
d
ipm
ent
2012
2020
What are the windows of opportunities opened to the EU and
USA PV producers?
●
Niche production
●
Emerging PV technologies (i.e.: organic PV, thin-film)
●
●
Novel applications (Building Integrated PV – BIPV; distributed
electricity)
Importance of consistent and long-term policies to sustain:
R&D, at the pilot production/demonstration stage
Demand: for emerging niche applications of differentiated PV
products (i.e. BIPV)
Thank you!
!
[email protected]
SOME ADDITIONAL SLIDES
AVERAGE PRICE FOR PV ROOFTOP SYSTEMS IN
GERMANY (10kWp - 100kWp)
Source: Fraunhofer Institute for Solar Energy Systems, ISE – Photovoltaics Report 2015
FACTORS DRIVING PRICES DOWN
●
●
●
●
●
Declining prices for inputs (notably polysilicon);
Competition from other PV technologies (lower-priced thin film
products);
Phasing out of government incentives and demand subsidies;
Increasing economies of scale and efficiency improvements
(driven by learning and innovation);
Oversupply and tough competition, mainly due to Chinese
massive production capacity
OVERVIEW OF COMMERCIAL PV TECHNOLOGIES AND
EFFICIENCY
Surce: EPIA 2010; Photon International, March 2010. EPIA analysis. Efficinecies based on standard test conditions
Consumo di silicio (g/Wp)
Wafer thickness (μm)
C-Si WAFER THICKNESS OVER TIME
FV in Cina: il contesto, consumi energetici ed
emissioni di CO2